Gyeonggi unveils two-track plan to overcome billion-dollar annual fiscal deficit

Gyeonggi Province has responded to annual consolidated fiscal deficits of more than 1 trillion won with a two-track plan: find more revenue and overhaul spending.

Economic Vice Governor Joo Hyung-chul presented the strategy at the provincial government office after a task force held seven rounds of discussions and expert reviews over three weeks. The work followed Governor Choo Mi-ae’s declaration of a fiscal emergency.

The task force set a goal of securing more than 1 trillion won in additional tax revenue during the 2027-2030 term without separate legal amendments. Its measures include tougher collection of unpaid taxes, attracting registrations for rental vehicles as a new revenue source, and seeking dividend payments from public corporations such as Gyeonggi Housing and Urban Development Corporation.

Under the dividend plan, the province would receive part of public corporations’ net profits as their major shareholder instead of allowing all of those earnings to remain in internal reserves. The province also plans to seek an increase in the local consumption tax rate linked to value-added tax, from 25.3% to 40%. It estimates that the change could provide Gyeonggi with about 1.4 trillion won in additional annual funding.

Gyeonggi will ask the national government to redirect the local education tax tied to tobacco consumption, which is scheduled to expire at the end of this year, toward firefighting and safety funds. The province says it spends 1.5 trillion won a year on firefighting budgets and salaries for more than 10,000 firefighters, while receiving 130 billion won in national support.

Other proposals include allocating 5% of corporate tax to metropolitan governments that invest in infrastructure for advanced industrial complexes and correcting formulas that disadvantage Gyeonggi in general grants. On spending, the province will reassess projects lasting more than three years, end duplicate programs and require funding plans for new projects. It said public safety, basic welfare and future investment will remain protected.

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We will activate two-track implementation bodies for securing revenue and restructuring spending, form a local finance cooperation council with the provincial assembly, and work with the National Association of Governors and the National Assembly to pursue the necessary legal amendments